Airports Authority of India v. M/s.K.N.Rai

Judgment

1. By this petition the Petitioner filed under Section 34 of the Arbitration & Conciliation Act the Petitioner challenges the award made by the learned Arbitrator directing the Petitioner to pay certain amounts to the Respondent.

2. The Petitioner had awarded a contract to the 2 Arbp338.07 Respondent on 9-9-2002. The cost of the contract was Rs. 58,08,750/- . The work was commenced on 23-9-2002 and it was actually completed on 14-7-2003. The final bill was submitted by the Respondent for Rs.8,58,782.40. It was stated in the final bill that the total amount payable was Rs.51,06,891.40. The Contractor had already received an amount of Rs.42,48,109/- , leaving balance of Rs.8,58,782.40. Final bill was submitted on 15-9-2003. On 9-10-2003 the Petitioner made payment of Rs.8,35,835/- against the final bill. Thus against the total amount claimed i.e Rs.8,58,782, Rs.8,35,835/- was paid.

3. It appears that after payment of the final bill on 9-10-2003, additional demands were raised by the Respondent on 10-11-2003. Further demands were raised by the Respondent on 17-6-2005. The amounts were not paid by the Petitioner. Therefore, arbitration clause was invoked and disputes were referred to the arbitrator.

4. Before the Arbitrator it was claimed on behalf of the Petitioner that the claims raised by the Respondent cannot be considered because they are deemed to have been waived in view of Clause 52 and 52.2 of the contract. It was also claimed that the 3 Arbp338.07 claims are also barred by the time limit which is given in clause 52.2 of the contract. The learned Arbitrator made the award awarding certain claims in favour of the Respondent. The present petition has been filed under Section 34 challenging the award of the learned Arbitrator.

5. The learned Counsel appearing for the Petitioner relying on Clause 52 of the contract submits that the final bill is to be submitted by the contractor within three months of the physical completion of the contract and there is a prohibition imposed on the contractor of making any further claim after submission of the final Bill and it is also provided that if any claims are not made in the final Bill, they shall be deemed to have been waived. It is submitted that the Respondent had submitted the final Bill on 15-9-2003 and in the final Bill he had claimed the total amount of Rs.51,06,891.40. Out of which an amount of Rs.42,48,109.08 was already paid to him, leaving balance an amount of Rs.8,58,782.40. The Petitioner accepted almost the entire amount claimed by the Respondent in the final Bill and paid him an amount of Rs.8,35,835/- on 9-10-2003.

The learned Counsel appearing for the Petitioner submitted that the deduction from the amount claimed in the final Bill appears to have made on account of some payment of taxes. He submits that 4 Arbp338.07 therefore whatever was claimed in the final Bill was paid by the Petitioner. Therefore, there was no room for making any additional claim and if the Respondent had any additional claims, they were deemed to have been waived in view of Clause 52. He submits that in paragraph 2 of the Written Statement it was specifically urged that the claims that have been made by the Respondent before the Arbitrator are claims which have been deemed to have been waived by him in view of Clause 52 of the contract. But the learned Arbitrator in his award has not considered this contention at all, though, it was specifically raised before him. The learned Counsel pointed out that in ground 4(c) of the Petition this contention was specifically raised. The Respondent has filed reply. The Respondent has not contended that this contention was not urged before the learned Arbitrator. It is further submitted that it was also urged before the learned Arbitrator that Clause 52 sets a time limit for raising claims which have been included in the final Bill, but have not been paid by the Petitioner. According to the Petitioner, claims that were made on 17-6-2005 were made beyond that time. Only this contention has been considered by the learned Arbitrator and has been rejected relying on the provisions of Section 28 of the Contract Act. 5 Arbp338.07

6. The learned Counsel appearing for the Respondent, on the other hand, submits that the contention that these claims were not made in the final Bill was not raised before the learned Arbitrator. According to her the final Bill was not submitted by the Contractor. She further submitted that Clause 52 of the Contract will not prevent the Respondent from raising the claims which are not included in the final Bill in view of the provisions of Section 28 of the Contract Act. She also submitted that according to her the claims which were made on 10-11-2003 as also on 17-6-2005 were included in the final Bill. The learned Counsel submitted that the learned Arbitrator has not considered this point because it was not raised before him and the only contention raised before him that the claims are barred by limitation because of Clause 52.2 of the Contract.

7. Now, for considering the submission made on behalf of the parties, it is necessary to refer to Clause 52 of the contract. It reads as under:

52.The final bill shall be submitted by the Contractor within three months of physical completion of the Works. No further claims shall be made by the Contractor after submission of 6 Arbp338.07 the final bill and these shall be deemed to have been waived and extinguished. Payment of these items of the bill in respect of which there is no dispute and of items in dispute, for quantities and at rates as approved by the engineer-in- charge, shall be made within the period specified hereunder, the period being reckoned from the date of receipt of the bill by the Engineer-in-Charge; (a)Contract amount not exceeding Rs.5 lacs -four months (b)Contract amount exceeding Rs.5 lacs- Six months

8. Reading of this clause makes onething clear that the responsibility of submitting the final Bill is on the Contractor. Obviously, therefore, when the Contractor submits final Bill, he will include all his claims in the final Bill, and therefore, the provisions is made in this Clause that if the Contractor omits to make any claims in the final Bill, he would be deemed to have waived those claims and those claims will stand extinguished. The learned Counsel appearing for the Respondent submitted that the claims which were made on 10-11-2003 and 7-6-2005 were included in the final Bill. Perusal of the letter dated 10-11-2003 shows that in that letter the Respondent nowhere claims that the claims that he is making by this letter were included in the final Bill and the Petitioner refused to 7 Arbp338.07 make payment of those claims and therefore, he is raising these claims. Similar is the position in relation to the claims that were made on 7-6-2005. So far as the contention of the Respondent that these claims were included in the final Bill are concerned, perusal of the final Bill shows that by the final Bill only an amount of Rs. 8,58,782.40 was claimed as payable and as against that amount, an amount of Rs.8,35,835/- was actually paid. And therefore, it is impossible that the claims in excess of Rs.10 lacs made in the final Bill would be rejected. It is, thus, clear that there is no substance in the contention raised on behalf of the Respondent that these claims were raised in the final bill.

9. So far as the contention of the learned Counsel appearing for the Respondent that this contention about waiver was not raised before the learned Arbitrator is concerned, bare perusal of paragraph 2 of the Written Statement of the Petitioner shows that this contention has no force. Paragraph 2 of the written statement reads as under:- “2. At the further outset, the Respondents submit that most of the claims of the Claimants before the Arbitrator are barred by limitation and the Arbitrator cannot entertain the said claims in as much as the Claimants have waived their rights to claim before the 8 Arbp338.07 Arbitrator in view of the clause 52 and clause 52.2 of the contract. ..........

10. Thus the contention that the claims have deemed to have been waived by virtue of clause 52 was specifically raised. Sub-section 3 of Section 28 of the Contract Act lays down that in all cases the arbitral tribunal shall decide in accordance with the terms of the contract. Thus, when the contention is raised that because of the terms in the contract the demands are deemed to have been waived, the learned Arbitrator was under a duty to consider that contention. I find that failure of the Respondent to raise the claims in the final Bill amounted to waiver of those claims. Therefore, they could not have been awarded by the learned Arbitrator.

11. In the result, therefore, petition succeeds and is allowed. The award impugned in the petition is set aside. (D.K.Deshmukh, J.)